Mention that of the four logistical drivers mentioned earlier, we will first focus on inventories. Information will be show up throughout. Recall the three levels of fit. We will start by discussing level I for for inventory and then move on to level III fit. What is the key objective of a supply chain? Make profits and get good return on assets. What is the key to success here? Matching supply and demand. Discuss over and under stocking. Give examples and mention the importance in today’s environment where product variety is increasing and life cycles are shrinking. What is the key to improved matching of supply and demand? Cycle or Flow time. What is key to reducing flow time? Reducing buffer inventories. Why do buffer inventories build? Discuss and list Economies of scale, uncertainty, and seasonal variability. Discuss quantity discounts highlighting the impact on batching and cycle time in spite of no fixed costs. Discuss trade promotions and short term discounting with a derivation for the quantity. Show the impact of small trade promotions and discuss chicken noodle soup example. Mention EDLP.